Mr. Bush unveiled his Medicare plan at a center for the elderly in Allentown after weeks of pressure from Vice President Al Gore, who considers health care one of his strongest issues and who has relentlessly accused his rival of avoiding specifics.

Mr. Bush's plan takes a sharply different approach from Mr. Gore's proposal. Mr. Gore would dedicate more money to shore up the current Medicare system and would then add a new government prescription drug benefit to the program.

"Medicare is an enduring commitment of our country," the Texas governor said. "It must be modernized for our times." [Page A22.]

Mr. Bush's $198 billion plan, modeled after bipartisan legislation on Capitol Hill, would be the most sweeping overhaul of the federal health insurance program for the elderly since its inception. He would create a system where private insurers compete with the government to provide coverage for the nation's 39 million Medicare beneficiaries. He also pledged that the government would cover the full cost of drug coverage for the low-income elderly.

Instead of providing people with certain defined health benefits as it does now under Medicare, the government would in essence provide subsidies that elderly people could then use to buy government-approved private insurance plans, including prescription drug coverage. Or they could choose to remain in the current Medicare system and still have the option of buying a subsidized prescription drug plan.

In the case of the elderly with the lowest incomes, $11,300 annually or less, the government would pay the entire cost of a plan that includes prescription drugs.

The Texas governor praised the Great Society health program for the elderly, which Democrats consider one of their greatest achievements and even approvingly quoted from Lyndon B. Johnson, who signed the program into law. "My party has often pointed out the limits and flaws of the Great Society," he said. "But there were successes as well. Medicare is one of them."

But he went on to offer a withering attack on government bureaucracy and on the federal Health Care Financing Administration, the agency that runs Medicare. "When you need a driver's license, bureaucracy can be frustrating," he said. "When you need medical care, bureaucracy can be a hazard to your health." And he quoted a Democrat, Senator John B. Breaux of Louisiana, who has compared Medicare to a 1965 Chevy.

He accused President Clinton and Mr. Gore of failing to seize the opportunity to reshape the system. "On health care, my opponent offers the same tired, partisan ideas that have led our country nowhere," Mr. Bush said. "His is the path of politics, the path of posturing, the path of least resistance. But it is not the path of leadership."

Many of the details of Mr. Bush's plan would take time and experience to work out, because his plan would allow people to pick and choose from a wide array of private insurance packages.

Mr. Bush's plan essentially builds on the expansion of managed care in Medicare that was required by the balanced budget act of 1997. In a system modeled after the health plan now offered to federal workers, the government would solicit various health insurance plans including prescription drug benefits from private companies and then allow people to select from an array of plans it approved or else remain in the current Medicare system. People would be free to buy the more generous plan at more cost to themselves.

"Some new benefits packages will be traditional fee-for-service," Mr. Bush said. "Others may be networks run by doctors. All must offer the minimum Medicare benefits and can add additional services to compete for customers. You can choose to keep your current Medicare benefit exactly the way it is, or, if you decide, you can add to it and you can improve it. It's your choice."

Mr. Gore and an array of other Democrats immediately criticized the plan as one that did not provide meaningful enough subsidies to help many of the elderly purchase drug coverage, arguing that it would leave half those who need it without drug coverage. And they said the plan would force more people into health maintenance organizations at a time when many H.M.O.'s have been pulling out of the Medicare market.

"It leaves millions of seniors without any prescription drug coverage," Mr. Gore said. "Middle-class seniors, nearly half of those who don't have coverage today, would not get coverage." He also charged that Mr. Bush had now proposed such a large tax cut and so many programs that he could not pay for the plan without causing a deficit, a contention the Bush campaign denied.

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To help people with drug costs, Mr. Bush would provide a sliding scale of subsidies, beginning with the full premium coverage for the low-income elderly to get a standard benefit package including drug coverage. A second group of elderly, with incomes between $11,300 and $14,600, would get an unspecified partial subsidy for the cost of their coverage for prescription drugs.

And for all other elderly, the government would pay 25 percent of the premium costs for prescription drug coverage. The government would also pay for all catastrophic medical expenses of more than $6,000 a year. According to the campaign, in all these subsidies would cost about $110 billion across a decade.

Because such an overhaul of the Medicare system could take years to set into law, Mr. Bush also offered a temporary four-year $48 billion plan to give grants to states to subsidize prescription drug coverage for the low-income elderly.

His aides said 23 states — Texas not among them — offer versions of such plans. But critics said such state plans now help only an estimated one million people. "Past experience has shown the states have only been able to cover small portions of those who need prescription drug coverage," said Ron Pollack, the executive director of Families USA, a nonpartisan, nonprofit group for health care consumers.

And Mr. Bush also called for $40 billion to be restored to Medicare for payments to doctors, hospitals and health care providers that were reduced under the budget act in 1997.

Health care issues are among the most potent ones on the campaign trail this year, most particularly the spiraling cost of prescription drugs for the elderly.

Mr. Bush's entry into the debate now sets up a sharp competition for the votes of the elderly concerned about health care. In a sign of just how intent the Democrats are to hold their traditional advantage on the issue, the Democratic National Committee said today it would begin running a commercial that seizes on a ruling by a federal district judge that Texas has violated a 1996 agreement to improve its Medicaid program for children.

"George W. Bush has a plan for children's health care. But why hasn't he done it in Texas?" the commercial asks. Texas is appealing the ruling.

Mr. Gore came out with his own prescription drug plan months ago. Showing the philosophical differences between the two parties, it is more expensive than Mr. Bush's — costing at least $253 billion over 10 years — and it creates the prescription drug benefit inside the traditional Medicare program. His coverage for people with catastrophic drug costs would start after a beneficiary spent $4,000 on medicines.

The plan would pay all drug costs for the roughly 13 million uncovered Medicare recipients with incomes making up to about $11,300 a year. For those with higher incomes, his plan would pay half a Medicare recipient's drug costs, up to $5,000 a year. Once that cap is met, beneficiaries would pay out-of-pocket up to an additional $1,500. After that, catastrophic coverage would kick in.

Mr. Gore's aides say the uniform nature of their plan is part of its appeal — it would effectively give Medicare vast purchasing power and the ability to extract deep discounts from drug makers.

A spokesman at the Pharmaceutical Research and Manufacturers of America, the Washington trade group, said the group's experts were still reviewing the details of Mr. Bush's plan and could not say yet whether they supported it. Neil B. Sweig, a drug analyst at Ryan, Beck & Company, said Governor Bush's plan was clearly more favorable to the drug companies and to the companies' investors.

"By making government agents the largest purchaser of prescription drugs in America," he said, "by making Washington the nation's pharmacist, the Gore plan puts us well on the way to price control for drugs."

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A version of this article appears in print on September 7, 2000 of the National edition with the headline: Bush Spells Out Major Overhaul in Medicare Plan. Order Reprints|Today's Paper|Subscribe